October 2011services rendered. Alternatively, the parties may utilize an escrow account, orsimilar instrument, that disburses the funds upon the instructions of thelicensee. So, for example, a Third Party Provider may accept consumer creditcard information, debit the card, deposit the funds in an account under thelicensee’s ultimate control, and, upon the licensee’s acceptance of the orderand direction to the account holder, receive a fee from the account. Given thenature of Internet transactions, the Department recognizes that such collection,acceptance, and disbursement of funds will often times be accomplished solelythrough computer-generated means.
Licensees may not give any premium, gift, or free goods, directly or indirectly,in connection with the sale or distribution (including marketing) of alcoholicbeverages, unless expressly authorized by law. (Business and ProfessionsCode section 25600; Title 4, Cal. Code of Regulations, section 106.) Thismeans that a Third Party Provider acting for or on behalf of a licensee cannotengage in such activities in connection with the sale, distribution, or marketingof that licensee’s products. Disclaimers such as “void where prohibited bylaw” or “included with purchase” may not relieve a licensee of liability wherethe consumer is not actually charged for the item offered “free” or theconsumer has no choice but to “purchase” the item offered “free” to non-California consumers. Accordingly, invoices should accurately reflect the cost,or reduction in cost, to the consumer.
Third Party Providers may receive compensation for services provided. Suchcompensation must be reasonable, and any compensation structure utilizedmay not result in any actual or de facto control over the licensed businessoperations, in whole or in part, by the Third Party Provider. In evaluating theintent and impact of any particular compensation structure, the Departmentwill look at the total operations and relationships between the parties todetermine whether a non-licensee is in fact exercising license privileges, orengaging in any activities for which a license is required.
The Department has received specific inquiries concerning the licensing of trademarks and compensation for such licensing arrangements. TheDepartment recognizes that trademarks have value and that a trademark holdermay generally license the use of its trademark and receive compensation forsuch a license. Moreover, the Department also recognizes that a trademark holder has an interest in insuring that products sold under the authority of thelicensed trademark meet standards of quality established by the trademark holder. As with compensation structures, the Department will look to thetotality of the trademark license arrangement to determine whether or not thereis any excessive license fee such that the trademark holder is engaging inactivities for which an ABC license is required, or if there exist indicia of